16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION IN RE: SH 130 CONCESSION COMPANY, LLC, CASE NO. 16-10262 ZACHRY TOLL ROAD 56 LP CASE NO. 16-10263 CINTRA TX 56 LLC CASE NO. 16-10264 DEBTORS. CHAPTER 11 EIN: 20-8490258; 20-8596022; 20-8059105 10800 N US 183 HWY BUDA, TEXAS 78610-9460 JOINT ADMINISTRATION REQUESTED DEBTORS MOTION FOR ENTRY OF AN ORDER AUTHORIZING JOINT ADMINISTRATION TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: SH 130 Concession Company, LLC (the Concessionaire ) and certain of its affiliates, as debtors and debtors in possession (collectively, the Debtors and each, a Debtor ), submit their Motion for Entry of an Order Authorizing Joint Administration (the Motion ), pursuant to section 105(a) of title 11 of the United States Code (the Bankruptcy Code ), Rule 1015(b) of the Federal Rules of Bankruptcy Procedures (the Bankruptcy Rules ), and Rule 1015 of the Local Court Rules of the United States Bankruptcy Court for the Western District of Texas (the Local Rules ). In support thereof, the Debtors respectfully represent: 1 1 A description of the Debtors businesses and the reasons for commencing these chapter 11 cases is set forth in the Declaration of Paul Harris in Support of the Debtor s Chapter 11 Petitions and First Day Motions, sworn to on March 2, 2016 (the Harris Declaration ), which is incorporated herein by reference. This Motion is supported by the Harris Declaration.
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 2 of 11 JURISDICTION AND VENUE 1. The Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper pursuant to 28 U.S.C. 1408 and 1409. BACKGROUND 2. On the date hereof (the Petition Date ), each of the Debtors commenced cases (the Chapter 11 Cases ) under chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in the Chapter 11 Cases, and no committees have been appointed or designated. 3. On June 28, 2006, the Debtors investors reached a $1.3 billion agreement with the State of Texas to finance, develop, design, construct, operate, and maintain segments five and six (the Tollway ) of Texas State Highway 130 ( SH 130 ). In 2007, the Debtors were formed to implement these plans with respect to the Tollway in partnership with the Texas Department of Transportation ( TxDOT ). SH 130 is a component of the Central Texas Turnpike System, and runs in a 91-mile corridor commencing north and east of Austin and ending east of San Antonio. The Tollway portion of SH 130 forms a 41-mile link from Mustang Ridge, Texas through Travis, Caldwell, and Guadalupe counties to Interstate 10 near Seguin, Texas. 4. Construction of the Tollway began in April 2009, and created more than 3,600 jobs and engaged more than 150 Texas-based companies. The Tollway opened to traffic on October 24, 2012, and provides a fast and convenient highway for commuters and long distance travelers. The posted speed limit on the Tollway s main lanes is 85 miles per hour the highest 2
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 3 of 11 posted speed limit in the United States. Throughout the Tollway, drivers enjoy the benefits of open road tolling, whereby tolls are assessed electronically at certain points along the Tollway without the use of toll-booths, enabling motorists to drive the entire 41-mile Tollway at highway speeds without having to slow down or stop for payment. 5. The key driver of the Debtors profitability is traffic volume on the Tollway, as the Tollway generates revenue by the assessment of tolls in exchange for the use of the road. Concessionaire and TxDOT are parties to that certain Facility Concession Agreement, SH 130 Segments 5 and 6 Facility, dated March 22, 2007 (the FCA ). The FCA sets forth the terms and conditions of TxDOT s grant to the Concessionaire of the exclusive right to impose tolls. Pursuant to the FCA, the Concessionaire developed and constructed, and now operates and maintains, the Tollway. The FCA also governs the terms and conditions of the toll revenue sharing arrangement between the Concessionaire and TxDOT. Under the terms of the FCA, TxDOT has no obligation to commit any funds to the development, construction, operation, and maintenance of the Tollway. Since it began operating the Tollway, the Concessionaire has made payments to TxDOT under the FCA in the amount of $142.6 million. 2 No TxDOT funds were utilized in the construction of the Tollway. 6. Pursuant to the FCA, the Concessionaire has the exclusive right to (a) impose tolls upon the Tollway, (b) establish, modify and adjust toll rates subject to a maximum amount as set forth in the FCA, (c) receive toll amounts, and (d) subject to TxDOT s right to perform toll handling, collection, and enforcement services, to enforce and collect tolls. The Concessionaire also has exclusive rights to all Toll Revenues (as defined in the FCA but excluding Video Trip 2 The breakdown of these payments is as follows: (i) $25.8 million for a concession payment, (ii) $15.3 million for payment sales tax related payment, (iii) $100 million in connection with increasing the speed limit on the Tollway to 85 miles per hour, and (iv) $1.5 million in connection with hazardous material remediation charges. 3
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 4 of 11 Toll Premiums (as defined in the FCA)), subject to TxDOT s right to share in a percentage thereof. 7. As of the Petition Date, the Debtors employ approximately 30 employees. The Debtors prepetition capital structure consists of (a) senior secured debt consisting of (i) private loans, (ii) certain obligations arising from interest rate hedging arrangements, and (iii) loans made by the United States Department of Transportation ( USDOT ) under the Transportation Infrastructure Financing and Innovation Act of 1998 ( TIFIA ), and (b) certain other miscellaneous unsecured debt. As of the Petition Date, the Debtors total consolidated lender debt (excluding trade debt but including amounts owing to USDOT under TIFIA) consisted of an aggregate principal amount of approximately $1.272 billion, plus accrued interest, fees, expenses, charges, and other obligations (including swap obligations) incurred in connection therewith. The Debtors estimate their unsecured liabilities to be approximately $2.0 million as of the Petition Date. The Debtors shareholders have invested approximately $345.5 million of equity in the Concessionaire. 8. Since its inception, a number of factors have coalesced that significantly strained the Concessionaire s ability to continue to service its outstanding indebtedness and, ultimately, led to the Debtors filing of the Chapter 11 Cases. Those events include the worldwide economic crisis that commenced in 2007 which affected nearly every segment of the United States economy and the concomitant negative impact on projected traffic volumes has led to revenues being significantly below levels projected when construction of the Tollway was financed. Because of less-than-projected revenues generated by the Tollway, the Debtors do not have the liquidity necessary to service their prepetition senior debt, thus precipitating the filing of the Chapter 11 Cases. These circumstances, coupled with the Concessionaire s unsuccessful 4
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 5 of 11 attempts to implement an out-of-court restructuring and the Concessionaire s potential defaults under the Senior Credit Facility and Swap Agreements, resulted in the commencement of these Chapter 11 Cases to maximize the value of the Tollway for all stakeholders. 9. The Debtors commenced these Chapter 11 Cases with the goal of developing and implementing a comprehensive proposal designed to enable the Debtors to restructure their debts and realize the full value of the Tollway over time for the benefit of the Debtors creditors and other stakeholders. RELIEF REQUESTED 10. The Debtors request the immediate entry of an order providing for the joint administration of the Chapter 11 Cases for procedural purposes only. In particular, the Debtors request that the Court implement the following procedures: (a) (b) (c) One docket shall be maintained for the Debtors cases under the case number assigned to SH 130 CONCESSION COMPANY, LLC. The caption of the cases shall be modified to reflect their joint administration as referenced on Exhibit A hereto. A notation substantially similar to the following notation shall be entered on the docket for all other Debtors to reflect that each Debtor s chapter 11 case shall be jointly administered under the SH 130 CONCESSION COMPANY, LLC case: An order has been entered in this case directing the joint administration of the chapter 11 cases of SH 130 Concession Company, LLC, CINTRA TX 56 LLC and Zachry Toll Road 56 LP; the docket for SH 130 Concession Company, LLC should be consulted for all matters affecting this case. BASIS FOR RELIEF REQUESTED A. The Debtors are Affiliates Under Federal Bankruptcy Rule 1015(b) 11. Bankruptcy Rule 1015(b) provides that, if two or more petitions are pending in the same court by or against a debtor and an affiliate, the court may order a joint administration 5
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 6 of 11 of the estates. Fed. R. Bankr. P. 1015(b). Section 101(2) of the Bankruptcy Code defines affiliate to mean, among other things: 11 U.S.C. 101(2). [an] entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor... [or] [a] corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor, or by an entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor.... 12. Joint administration of the Debtors cases is warranted because each Debtor, as set forth in the Harris Declaration, is an affiliate of one or more other Debtors under section 101(2) of the Bankruptcy Code. 13. Courts routinely, and generally without controversy, approve joint administration of interrelated chapter 11 cases in this District. See In re UPH Holdings, Inc., Case No. 13-10570 (Bankr. W.D. Tex. April 2, 2013); In re KLN Steel Products Co., LLC, Case No. 11-12855 (Bankr. W.D. Tex. Nov. 23, 2011); In re TXCO Resources Inc., Case No. 09-51807 (Bankr. W.D. Tex. May 19, 2009). B. Joint Administration of the Estates Will Provide Greater Ease of Administration 14. The joint administration of the Chapter 11 Cases will permit the Clerk of the Court to utilize a single general docket for these cases and combine notices to creditors of the Debtors respective estates and other parties in interest. Entering an order directing joint administration of the Chapter 11 Cases will avoid the need for duplicative notices, opinions, motions, applications, and orders, thereby saving time and expense that otherwise would be required to administer individual cases. Because the Chapter 11 Cases potentially involve a large number of creditors and notice parties, the entry of an order of joint administration will: 6
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 7 of 11 (a) significantly reduce the volume of pleadings that otherwise would be filed with the Clerk of the Court; (b) render the completion of various administrative tasks less costly; and (c) minimize the number of unnecessary delays associated with the administration of numerous separate chapter 11 cases. Joint administration also will enable parties in each of the Chapter 11 Cases to receive notice of the various matters pending before the Court in all of the Chapter 11 Cases. 15. Joint administration will further simplify supervision of the Chapter 11 Cases by the Office of the United States Trustee, which, absent joint administration, would be made unnecessarily burdensome. 16. In addition, no administrative or scheduling orders previously entered in these cases will require modification. 17. Notwithstanding the joint administration of the Chapter 11 Cases, each of the Debtors shall (a) not be liable for the claims against any of the other Debtors by virtue of the Order and (b) file separate bankruptcy schedules and statements of financial affairs. C. No Party in Interest Will Be Prejudiced By Virtue of the Relief Requested 18. The rights of the respective creditors of the Debtors will not be adversely affected by the proposed joint administration of the Chapter 11 Cases because the rights of each creditor against the respective estates will be preserved. The Motion seeks neither substantive consolidation of the Debtors estates, nor modification of the relative rights and remedies of creditors against any of the individual Debtors. Thus, the substantive rights of parties in interest will not be prejudiced or otherwise negatively affected by the entry of an order directing the procedural joint administration of the Chapter 11 Cases. 19. For these reasons, the Debtors submit that the relief requested herein is in the best interest of the Debtors, their estates, creditors, and other parties in interest, and, therefore, should be granted. 7
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 8 of 11 NOTICE 20. The Debtors have provided notice of the filing of the Motion either by electronic mail, facsimile, or overnight mail to: (i) the Office of the United States Trustee for the Western District of Texas; (ii) the Debtors 20 largest unsecured creditors on a consolidated basis; (iii) counsel to the agent for the Debtors prepetition senior credit facility; (iv) counsel to the steering committee of lenders under the Debtors prepetition senior credit facility; (v) counsel to the TIFIA Lender; (vi) the Collateral Agent for the Debtors prepetition loan agreements; and (vii) counsel to TxDOT. Due to the nature of the relief requested herein, the Debtors submit that no other or further notice is required. A copy of the Motion is also available on the website of the Debtors proposed Noticing and Claims Agent, Prime Clerk LLC, at https://cases.primeclerk.com/sh130. NO PRIOR REQUEST 21. No prior request for the relief sought in this Motion has been made to this or any other court. WHEREFORE, PREMISES CONSIDERED, the Debtors respectfully request that the Court grant the relief requested herein and such other and further relief as the Court may deem just and proper. Dated: March 2, 2016 8
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 9 of 11 Respectfully submitted, David M. Feldman (pro hac vice pending) Matthew K. Kelsey (pro hac vice pending) Alan Moskowitz (pro hac vice pending) Matthew G. Bouslog (pro hac vice pending) GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 Email address: DFeldman@gibsondunn.com Email address: MKelsey@gibsondunn.com Email address: AMoskowitz@gibsondunn.com Email address: MBouslog@gibsondunn.com JACKSON WALKER L.L.P. 100 Congress Ave., Suite 1100 Austin, Texas 78701 (512) 236-2000 (512) 236-2002 - FAX By: /s/ Patricia B. Tomasco Patricia B. Tomasco State Bar No. 01797600 (512) 236-2076 Direct Phone (512) 691-4438 Direct Fax Email address: ptomasco@jw.com Jennifer F. Wertz State Bar No. 24072822 (512) 236-2247 Direct Phone (512) 391-2147 Direct Fax Email address: jwertz@jw.com PROPOSED COUNSEL FOR THE DEBTORS 9
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 10 of 11 EXHIBIT A
16-10262-tmd Doc#2 Filed 03/02/16 Entered 03/02/16 15:39:16 Main Document Pg 11 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION IN RE: SH 130 CONCESSION COMPANY, LLC, CASE NO. 16-10262 ZACHRY TOLL ROAD 56 LP CASE NO. 16-10263 CINTRA TX 56 LLC CASE NO. 16-10264 DEBTORS. CHAPTER 11 EIN: 20-8490258; 20-8596022; 20-8059105 10800 N US 183 HWY BUDA, TEXAS 78610-9460 JOINTLY ADMINISTERED UNDER CASE NO. 16-10262 15836537v.1 146162/00001 2
16-10262-tmd Doc#2-1 Filed 03/02/16 Entered 03/02/16 15:39:16 Proposed Order Pg 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION IN RE: SH 130 CONCESSION COMPANY, LLC CASE NO. 16-10262 ZACHRY TOLL ROAD 56 LP CASE NO. 16-10263 CINTRA TX 56 LLC CASE NO. 16-10264 DEBTORS. CHAPTER 11 EIN: 20-8490258; 20-8596022; 20-8059105 10800 N US 183 HWY BUDA, TEXAS 78610-9460 JOINT ADMINISTRATION REQUESTED ORDER GRANTING DEBTORS MOTION FOR ENTRY OF AN ORDER AUTHORIZING JOINT ADMINISTRATION Upon consideration of the Motion for Entry of an Order Authorizing Joint Administration (the Motion ) 1 filed by the above-captioned Debtors; and the Court having found that it has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157 and 1334; and upon consideration of the Harris Declaration in support thereof; and the Court having found that consideration of the Motion and the relief requested therein is a core 1 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion. 1
16-10262-tmd Doc#2-1 Filed 03/02/16 Entered 03/02/16 15:39:16 Proposed Order Pg 2 of 4 proceeding pursuant to 28 U.S.C. 157(b); and the Court having found that venue of this proceeding in this District is proper pursuant to 28 U.S.C. 1408 and 1409; and it appearing that notice of the Motion as set forth therein is sufficient under the circumstances; and the Court having reviewed the Motion and having considered statements in support of the Motion at the hearing held before this Court (together, the Hearing ); and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor, IT IS HEREBY ORDERED: 1. The Motion is granted as set forth herein. 2. The Chapter 11 Cases of SH 130 Concession Company, LLC, Zachry Toll Road 56 LP, and CINTRA TX 56 LLC shall be jointly administered in accordance with the terms of this Order. 3. Nothing contained in this Order shall be construed as directing or otherwise effecting a substantive consolidation of the bankruptcy cases of the Debtors; it is the Court s intention to jointly administer the bankruptcy cases of the Debtors for procedural purposes only. 4. SH 130 Concession Company, LLC, Zachry Toll Road 56 LP, and CINTRA TX 56 LLC are to be jointly administered under Case No. 16-10262. 5. Judge Tony M. Davis shall preside over these jointly administered cases. 6. The joint caption of the SH 130 Concession Company, LLC, Zachry Toll Road 56 LP, and CINTRA TX 56 LLC cases shall read as shown in Exhibit A attached to the Motion. 1
16-10262-tmd Doc#2-1 Filed 03/02/16 Entered 03/02/16 15:39:16 Proposed Order Pg 3 of 4 7. Notwithstanding the joint administration of these Chapter 11 Cases, all original pleadings shall be captioned as set out above and all original docket entries shall be made in the case of SH 130 Concession Company, LLC, Case No. 16-10262. 8. All proofs of claim shall be filed under the case number representing each Debtor s estate against which the claim is made. 9. The Debtors, their creditors, and other parties in interest are hereby authorized to file and serve combined notices, pleadings, and other papers as necessary to promote efficient administration of the Chapter 11 Cases. 10. Each of the Debtors shall (a) not be liable for the claims against any of the other Debtors by virtue of this Order and (b) file separate Bankruptcy Schedules and Statements of Financial Affairs, if required by the Court. 11. A docket entry shall be made in each of the Debtors cases substantially as follows: An order has been entered in this case directing the joint administration of the chapter 11 cases of SH 130 Concession Company, LLC, Zachry Toll Road 56 LP, and CINTRA TX 56 LLC; the docket in the chapter 11 case of SH 130 Concession Company, LLC, Case No. 16-10262 should be consulted for all matters affecting this case. 12. The Debtors shall file a master service list in SH 130 Concession Company, LLC, Case No. 16-10262 which shall include all creditors, persons filing Notices of Appearances, and all parties-in-interest in all of the Debtors jointly administered cases for future noticing requirements. 13. This order shall be served by the Debtors on interested parties and all parties included on the master service list. ### 2
16-10262-tmd Doc#2-1 Filed 03/02/16 Entered 03/02/16 15:39:16 Proposed Order Pg 4 of 4 PREPARED AND SUBMITTED BY: David M. Feldman (pro hac vice pending) Matthew K. Kelsey (pro hac vice pending) Alan Moskowitz (pro hac vice pending) Matthew G. Bouslog (pro hac vice pending) GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 Email address: DFeldman@gibsondunn.com Email address: MKelsey@gibsondunn.com Email address: AMoskowitz@gibsondunn.com Email address: MBouslog@gibsondunn.com Patricia B. Tomasco State Bar No. 01797600 Jennifer F. Wertz State Bar No. 24072822 Jackson Walker LLP 100 Congress Avenue, Suite 1100 Austin, Texas 78701 (512) 236-2000 Main Phone (512) 236-2000 Main Fax Email address: ptomasco@jw.com Email address: jwertz@jw.com PROPOSED COUNSEL FOR THE DEBTORS 15836508v.1 146162/00001 3